The Challenge
As Alternative Investment Funds (AIFs) mature, greater transparency is needed. This is especially the case given the trend for some funds to access loans from banks and other financial institutions to boost their leverage. This increased leverage within the AIF universe poses potential credit risks to various counterparties that provide fund financing. As a result, it is important to effectively score the credit risk of an AIF.
The Solution
S&P Global Market Intelligence Credit Assessment Scorecards provide a valuable framework for assessing credit risk, including access to benchmarks and attribute-driven scoring guidelines. The AIF Scorecard provides an easy-to-use, intuitive structure for financial institutions to evaluate the creditworthiness of funds, and also supports an assessment of the credit risk of an AIF’s debt instruments.
AIF Scorecard’s business applications
The AIF Scorecard provides a powerful capability for organizations to consistently measure credit risks across AIFs that have different strategies and structures, including:
- Hedge Funds
- Private Equity Funds
- Fund of Funds (FOFs)
- Fund-like Entities
- Transparency and complexity
AIF Scorecard structure
The AIF Scorecard provides a granular and transparent framework for assessing credit risk. It uses measures that can affect the likelihood of default, and these are sensitive to changes in an AIF’s market conditions. They include:
- Stressed leverage
- Risk position
- Funding and liquidity
- Jurisdiction risk
- Fund track record and investment performance
- Risk management
- Transparency and complexity
S&P Global Market Intelligence. We provide essential insights for our clients through powerful business intelligence solutions that combine comprehensive data, actionable analytics
S&P Global Market Intelligence. We provide essential insights for our clients through powerful business intelligence solutions that combine comprehensive data, actionable analytics
